Entering August, oil prices ended their rebound from mid-July to the end of July and began a new round of decline. European and American crude oil futures have fallen by a net 10% in the past week. This round of decline will become the first “four consecutive declines” since 2019. Among them, New York oil prices fell by 9.74%, and Brent oil prices fell by 8.70%. At this point, international oil prices have fallen to the level before the outbreak of the Russia-Ukraine conflict.
Polyester trading sentiment is sluggish
Polyester yarn, which originally lacked rising momentum, continued to slump, driven by the decline in crude oil. The price of raw materials this year has been ups and downs. The cost trend is unstable, and downstream weaving companies are not willing to stock up. Moreover, after promotional replenishment at the end of July, most manufacturers currently have high raw material inventories. Therefore, the production and sales of polyester yarn will remain deserted in August. .
The trading atmosphere in polyester factories is sluggish. It is conceivable that downstream weaving manufacturers are also doomed. The two have a close relationship. Although it has entered August and the weakest month of July has passed, the weaving market is still in the off-season. In addition, in the past week, the hot weather has continued and will continue for another week. Factories are taking more turns and holidays, which affects the operating rate. According to the data monitoring of sample companies by Silkdu.com, the current operating rate of water-jet and air-jet looms in Shengze is only about 61%. This week, as the high temperature continues, some factories have begun to take holidays, and the operating rate will fall again.
The factory’s operating load has dropped, and the demand for raw materials has further decreased. In addition, the inventory has not been consumed, making it difficult for manufacturers to replenish supplies. In general, the decline in international crude oil and the decline in weaving operation rate have dragged down the downstream purchasing mentality, and there are weak expectations for polyester filament.
Improvement in orders may be hindered by the epidemic
In terms of terminals, as Christmas approaches, the foreign trade market shows obvious signs of improvement, especially the Yiwu Christmas market, which once again ushered in the peak period of rush orders and export shipments. In terms of domestic sales, some new orders have begun to be placed, including orders for autumn and winter fabrics. Since mid-July, the operating rate of circular knitting machines in Guangdong, Fujian, Zhejiang and other places has rebounded, and some knitting companies have received orders for knitted cotton fabrics such as underwear, vests, and T-shirts.
Just when the off-season began to improve and domestic and foreign orders began to show signs of growth, the domestic epidemic returned with a vengeance and spread in many places. The number of new cases in Yiwu is increasing. In view of the epidemic prevention and control requirements, entering and exiting Yiwu will not be smooth. Yiwu is the main production and sales place in the global Christmas supplies market, accounting for more than 70% of the market. The receipt and delivery of enterprises will be affected.
Global epidemic spreads, worries rise
According to data from the U.S. Centers for Disease Control and Prevention, the United States not only has the most confirmed cases and deaths of COVID-19 in the world, but also has the most confirmed cases of monkeypox in the world. Recently, the epidemic in Japan has continued to spread rapidly, becoming the country with the most serious new coronavirus epidemic in the world. Not only the domestic epidemic, but also the global epidemic is getting worse, which may affect the newly recovered orders in foreign trade.
Not only that, the epidemic situation has rebounded in many places across the country, and market concerns have increased, which will also have an impact on the textile market in the second half of the year. Textile people’s expectations for the second half of the year are weakening, which is likely to drag down the recovery of the domestic market and extend the off-season. The epidemic has always been the biggest factor restricting demand in the textile industry. As the epidemic worsens again, city closures, work stoppages and other situations frequently occur, which will lead to the loss of some orders. The epidemic in the first half of the year is a lesson learned from the past. As a result, companies stopped taking orders and dared not take orders even if they existed.
Editorial
At present, the operating rate is only in the off-season. Compared with the peak textile season of September and October in previous years, the weaving operating rate of each cluster will reach the highest peak of the year. In other words, the current operating rate is still far from the peak. During the period leading to the peak season, the recovery of the operating rate will still have a difficult road ahead.
In terms of the international situation, the Federal Reserve’s interest rate hike, the war situation between Russia and Ukraine, and the spread of the global epidemic will all have a certain impact on the market. The impact of the epidemic on the supply side of the industry is still continuing, and the downstream industry is about to usher in the traditional peak season. Under the pressure of the epidemic, the market direction may change.
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